Germany is playing a leading role in
formulating a European response to the ongoing
row over Iran's nuclear program, and that is bound
to have direct implications for the larger issue
of Germany's role and identity in the
international system and resolution of the crisis.

For the past three years, the German
government has been one of the European troika,
along with France and Britain (the EU-3), engaged
in nuclear diplomacy with Iran and, despite a
change of guards, there is considerable policy
continuity on the part of Chancellor Angela
Merkel.

Initially Merkel, being a novice
and highly critical of her predecessor's policy of
distancing German foreign policy from the

US,
rattled a few cages with her post-election leaps
in bandaging German-US relations, citing Iran as
an "example" of how things work between the two
countries.

Then came Merkel's blistering criticisms
of President Mahmud Ahmadinejad for his remarks
on Israel, which she compared in no unmistakable
language to fascism. In her trips to both
Israel and the United States, Merkel consistently
criticized Iran's nuclear and foreign policies,
which, in turn, fueled Germany's current role in
the Security Council debates on Iran, referred to
as "Permanent Five plus one".

While still short of the
formal veto power, the historical precedence set by
Germany's critical role in the Iran crisis will
undoubtedly be an important catalyst in paving
the road for Germany's eventual inclusion in the
Security Council's exclusive club, which is
now limited to the United States, the United Kingdom,
France, China and Russia.

This depends
to some extent on the global perception of
how Germany plays its diplomatic card with regard
to Iran. A compliant Germany, subservient to
the policy dictates of Washington, is unlikely
to receive much backing from the other powers in
its current bid to gain a permanent seat at
the Security Council. On the other hand,
an independent, self-generating diplomacy, based
on Germany's, and the European Union's,
calculations of risks and benefits, will have the
opposite effect. So far, Germany is evincing a
middle position, where signs of autonomous diplomacy
and old US dependency converge.

On the
positive side, Germany's adamant objection to the
military option against Iran, which Merkel
communicated to President George W Bush in her
recent White House visit, is a welcome development
that in a certain sense brings Germany closer to
Russia and China, both of whom oppose any
reference to UN's Article 42, which would set the
stage for a future US military action against
Iran.

Among the EU-3, Germany is, in fact,
the most enthusiastic proponent of the so-called
"carrot" approach, including the security
approach, favoring direct Iran-US talks.

Yet, contrary to Berlin's wishes, the US
has turned down both the Iranian offer of direct
talks as well as any "security guarantee" for
Iran, the justification being that Iran is a
"troublemaker in the world", to paraphrase
Secretary of State Condoleezza Rice.

But
don't expect the fissures between Berlin and
Washington to spill into the open any time soon.
Merkel and her ardent pro-American coalition are
committed to avoiding any "crisis of confidence"
with Washington, which she has blamed on Gerhard
Schroeder and his former Green Party foreign
minister, Joschka Fischer, who was intensely
disliked by the White House.

Fischer's
replacement, Frank-Walter Steinmeier, a member of
the leftist Social Democrats, has so far proved an
invaluable "balancer", bringing a measure of
equilibrium to the unbounded tendency of Merkel's
Christian Democratic Party to appease the
Americans.

Germany's stakes in the Iran
crisis Germany is Iran's No 1 European
trade partner and its booming import-export
with Iran will be a net casualty of any
UN (or other) sanctions on Iran, compared with the
United States, which has practically no economic
interests at stake in Iran as a result of 27 years
of US sanctions.

Iran is a major market
for Germany's industrial and technological
products, just as Germany is an importer of
Iranian oil and such goods as rugs; some 35% of
Iranian rugs are exported to Germany. According to
a recent article in Der Spiegel, "Between 2000 and
2005, German exports to Iran more than doubled.
Last year they reached a new record of 4.4 billion
euros [US$5.6 billion], or 0.6% of Germany's total
export volume. Manufacturers of machinery and
equipment are the main beneficiaries because Iran
is using German know-how to develop its economy."

Another report by the Iran-German Chamber
of Commerce indicates that as much as 75% of
Iran's small and medium industries rely on
imported goods and technology from Germany. German
companies and banks are also involved in projects
in Iran's industrial free zones.

Indeed,
in light of their physical proximity, a large
Iranian community in Germany, and so on, there is
every expectation of growing economic exchanges
and interdependencies between Germany and Iran,
absent the nuclear crisis. Because of the crisis,
however, these relations have suffered, not the
least because of growing US pressure, reflected in
the recent news that the US is utilizing
anti-terrorist laws to curb European banks'
involvement with Iran - with a measure of success.

As a result, as the nuclear row has
been upgraded to "pre-sanction sanctions", many
German companies have stayed away from Iran and
numerous deals in the pipeline, such as on airplanes
and parts, power generators, machinery, have been
put in limbo. Undoubtedly, such setbacks will
be minuscule compared with a few months or a year or so
from now when and if the UN or a "coalition of the
willing" imposes sanctions on Iran, which will
only benefit German black-marketeers.

Indeed, as Mohammed Nahavandian,
an economist with Iran's Supreme National
Security Council, recently stated, the implementation
of sanctions on Iran would be "impractical" because
of the size and nature of Iran's many frontiers, but
Iran would "incur extra expenses".

Therefore, to safeguard its
vested economic interests with Iran, the
German government must show a greater independence
from the hitherto coercive US approach, thinly
disguised as "diplomacy". The US
pseudo-diplomacy, if sheepishly followed by
Germany and other European countries, will harm
their economic interests, this when, to quote
former Italian prime minister Silvio Berlusconi,
"Europe has to compete with the US in the area of
economics and trade, rather than in politics."

What Berlusconi misses is that
by following the US diplomatic
prescriptions over Iran, Europe's economic and trade
interests will suffer, whereas what is needed is
an alternative European Iran policy that
fully recognizes "Iran's legitimate rights to
nuclear technology", to quote Javier Solana, the
EU's foreign-policy chief.

However, the problem
with the EU's present approach is that, first of
all, Iran's right under the Non-Proliferation Treaty
(NPT) to nuclear technology does not really
require any "recognition" by the EU and others,
and to the extent that under the present
circumstances such a statement is laden with
special meanings, then it must be taken to its
logical conclusion and extend to recognizing
Iran's right to produce nuclear fuel, per Article
IV of the NPT, under the necessary safeguards and
surveillance measures of the International Atomic
Energy Agency (IAEA). Otherwise, the statement by
Solana and other European officials remains vague
and indeterminate, denuded of substantive legal
connotations.

The question of security
guaranteeSecurity is a two-way process,
and if Germany and other Western powers seek
Iran's cooperation against global terrorism and
the threats of nuclear terrorism, then they must
show a better understanding and appreciation of
Iran's post-September 11, 2001, security anxieties. The
unprecedented influx of US military might in
Iran's vicinity has "securitized" Iran's
foreign-policy debates for the foreseeable future.
Yet the nub of dilemma on the question of
security has largely bypassed policy-makers
throughout Europe.

That dilemma is as follows:
the European suggestion of Iran's inclusion
in any regional security infrastructure is
naive and simplistic, given the structural conflict
between the US and Iran and their ongoing
games of strategy. The main reason the US is
incapable of formulating an Iran-inclusive security
framework in the Persian Gulf is precisely
because the operation of Iranian power in
the oil region works against the United States'
interventionist policies aimed at controlling the
access and flow of the strategic commodity relied
on by the industrial world, that is, oil and gas.

That is precisely why the US quest for
regime change in Iran will never completely
disappear, no matter what deals are brokered on
the nuclear front. A more prudent political
realism on Germany's, and Europe's, part would
step down from the wishful hope of full
normalization of relations between Iran and the
US. Instead, it would work toward bringing a
semblance of order and predictability to the
antagonistic relations between Tehran and
Washington.

Thus calls for more European
pressure on the US to make explicit pledges not to
interfere in Iran's internal affairs and to put
the regime change recipe (for disaster) on the
back burner are insufficiently mustered at
the present moment. After all, Europe is much
more cognizant of the perils of Iran's potential
"breakup", and the threats of irredentism with regard to
its own security, should the US make good on its
own policy of fomenting ethnic divisions inside
Iran.

That would mean escalating the
Middle East boiling pot to new heights of
insecurity, in light of Iran's present importance
as a strong centralized government contributing to
regional integration and cooperation, something
the EU countries can ill-afford.

Unfortunately, neither Germany alone nor
the EU as a whole can provide any security
guarantee to Iran without US backing, but that
does not mean that the EU cannot take proactive
steps, such as with respect to influencing the
North Atlantic Treaty Organization (NATO) against
taking stern anti-Iran steps or promoting
Iran-OSCE (Organization for Security and
Cooperation in Europe) cooperation, both in the
Persian Gulf and the Caspian Sea. The OSCE
advances the objective of a UN-like cooperative
security framework potentially favored by Iran.
Already, Iran has participated in a number of
OSCE-sponsored events, for example, on
environmental security.

Building on the
past, but which past?In crafting its Iran
policy, Merkel's government must deepen
"constructive engagement" with Iran and disregard
any suggestion that the EU's Iran diplomacy has
been a failure. Rather, the result so far has been
mixed, in light of Iran's marathon negotiations,
its willingness to implement the Additional
Protocol of the NPT, allowing intrusive
inspections of its nuclear facilities, as
requested by the EU-3 in 2003, until January 2006,
when Tehran dropped it in reaction to the EU's
backtracking on its promises in the Paris
Agreement.

This included, above all, a
pledge to respect Iran's "exercise" of its nuclear
rights "without discrimination". But, as stated by
Iran's chief nuclear negotiator, Ali Larijani,
Iran is willing to re-adopt the Additional
Protocol and to pass it through the parliament
(majlis).

Also, learning from
past errors of "nuclear reductionism", that
is, reducing the sum of Iran-German relations to
the nuclear issue, as warned by some top
German experts on Iran, such as Johannes Reissner of
the Berlin think-tank Stiftung fur Wissenschaft und
Politik, is mandatory if Merkel wishes to make a
tangible difference in the present crisis.

As Russian Foreign Minister Sergei Lavrov
recently stated, "isolating Iran" will have the
adverse effect of augmenting Iran's
non-cooperative behavior. The obverse strategy of
integrating Iran, reflected in the new European
package approach, should not be tactical, however,
but only if it is buffeted with the firm
guarantees of faithful implementation, will it
have a decent chance of success. From Iran's
vantage point, Germany's role in Iran's nuclear
program leaves a lot to be desired. The German
government failed to take any action when Siemens
reneged on its lucrative contract to build the
Bushehr power plant, forcing Iran to turn to
Russia in the mid-1990s for a project
half-finished. Consequently, the present European
offer of light water reactors to Iran cannot
possibly be taken seriously, short of serious
stipulations by the EU that would preclude the
recycling of such bitter experiences in the past.

Fortunately, Germany resisted some calls,
by Israel and its Washington lobbyists, for
excluding Iran from the upcoming soccer World Cup,
and there is a possibility of Ahmadinejad's
presence at the games, preemptively denounced by
the hawkish editorials of the Washington Times,
among others.

Merkel would be wise to send
Steinmeier to Iran ahead of those games and or to
invite Iran's Foreign Minister Manouchehr Mottaki
to Berlin, and to decouple to some extent
Iran-German trade and economic cooperation from
the nuclear row, as an intermediary measure that
could well have salutary effects on the nuclear
crisis.

The more Germany shows its ability
to engage in creative diplomacy toward Iran, the
better the chances of a mutually-satisfactory
resolution of this crisis, following the
assumption that Iran greatly values its continuous
interaction with Germany and other EU countries.

The crucial question at this critical
juncture is whether or not trans-Atlantic
considerations and US pressure will impede or
neutralize the present drift of Germany toward
finding its own voice on Iran.